Judge Gates Foundation by what it spends, not how it invests

The recent Los Angeles Times "investigation" of the Bill & Melinda Gates Foundation begins with a toddler in Nigeria. Thanks to Bill and Melinda, the boy has been immunized against polio. But the boy lives near a stinky oil-and-gas complex, and has a chronic cough on account of the pollution. The complex is owned by Eni, an Italian oil company in which the Gates Foundation owns stock.

The story, published Jan. 7, goes on to discuss an AIDS drug that poor Nigerians can't afford, and that the Gates Foundation owns stock in the drug company, Abbott Laboratories.

The Gates Foundation, said the L.A. Times, "reaps vast financial gains every year from investments that contravene its good works."

This is a campaign — in the Los Angeles paper, in the Chronicle of Philanthropy and in comments printed in this newspaper. The advocates of social investing are trying to convince foundations to use political, medical and environmental filters in investing.

A couple of big foundations do this, but the Gates Foundation, the largest of them all, has chosen not to, with one exception: It will not own tobacco shares. Generally, it defines its job as bettering the world by what it spends rather than by how it invests.

I think its decision — which pretty clearly comes from Bill and Melinda Gates — makes sense.

Here is the difference. Philanthropy can change the world in a verifiable way. That a Nigerian boy is vaccinated is a gain for him and for the world effort to stamp out polio. Social investing rarely deals in verifiable gains. Mainly, it exists to provide a foam of altruism over the activity of investing for oneself.

For example, the Sierra Club has a "green" mutual fund open to public investment. It invests in renewable energy but not in the oil industry. The practical result is that the fund makes hardly any investments in energy — or in timber or mining. Those are dirty, dirty, dirty. The largest share of its portfolio is in finance — nice, clean paper.

But what do financial companies do? They make loans to buy cars, which are made of metal and burn gasoline. They make loans to buy houses, which are made of chopped-down trees.

What's the point? Petroleum touches almost everything. Cigarettes are more specific, but even with them, if you don't buy one tobacco stock, and there is value in it, someone else will buy it. The price of a share in Altria Group, which owns Philip Morris, has more than doubled in four years. Somebody's buying it, probably for its 4-percent dividend.

In any case, buying a share of stock is not sending a company your money, unless the stock is on initial offering. It is buying a claim against a company. If you want to withdraw support from a company, the things to shun are its products.

For the Gates Foundation to sell its stock in an Italian oil company would do nothing for the child in Nigeria. Maybe if the foundation kept its stock and sent a lobbyist to Italy, it would change the company's behavior. But probably not.

Eni has more important things to worry about in Nigeria just now, including kidnapping of its employees by terrorists and a gasoline pipeline that exploded last month, killing 260 people. Yes, someone should take on the issue of air pollution in the Niger River Delta. But the Gates Foundation of Seattle is probably not the one. It has enough things to do already.

The Gates Foundation's business is philanthropy, which deals in verifiable benefits. The critics' business is social investing, which deals mainly in intentions, appearances and feelings.

Really, the press campaign is about one industry trying to get hired by the other. It is about the use of public shaming in order to sign up some new clients.

Bruce Ramsey's column appears regularly on editorial pages of The Times. His e-mail address is bramsey@seattletimes.com